The Day After Duluth, comments about ‘trade policy’

An international freight carrier off the shore of Australia. (PHOTO: Luke Peterson, Flickr CC)

A few days before U.S. Independence Day, our neighbors to the north hold their own national holiday, Canada Day. They throw a big party at the Canadian consulate in Minneapolis every year. I interviewed Canada’s governor-general in 2015, so they’re kind enough to send me invitations. Haven’t gone, but I half wonder how this year’s shindig might go.

More than 80 percent of Canadians now disapprove of the President of the United States. I suppose that makes some sense. He threatened a trade war and insulted their leader. Nevertheless, for a Canadian nation that prides itself on politeness, that’s remarkable. Those are worse numbers than when the Tampa Bay Lightning win the Stanley Cup.

Of course it doesn’t matter how Canadians feel about our president. The important thing is that only about 51 percent of our country currently disapproves of him (as of June 20). Normally, that’d be pretty bad, too. But those 51 percent? Those are just liberals, losers, minorities and criminals. Their opinion doesn’t matter. You know, basically like Canadians.

That’s a joke, kind of. It’s hard to laugh during a frustrating, disturbing year in politics. It’s not that funny because I know people supporting the president — about 42 percent of Americans — don’t see it as a joke at all. “Ha-ha! They DON’T count. They ARE losers.” This is the subtext of half the comments on this blog and most news sites.

So when we have a national outrage over the treatment of child refugees, we must not only deal with the emotional trauma of seeing the images and hearing the heartbreaking stories. We must also deal with people on social media telling us that we’re wrong to feel that way, and that it’s really our fault, Obama’s fault or anyone but the president’s fault. People we know. The nicest people, suddenly barking bile and pretending not to see.

For some it might be subconscious. They don’t mean it that way. But that doesn’t matter. Just like a Canadian’s opinion. There are those who throw punches and those who claim that no punches were thrown when someone lies bleeding on the floor. You can spend a lifetime wondering which hurts worse.

This is supposed to be a post about trade.

Can I level with you?

I’ve been writing this post on trade for weeks. Every time I thought I had it, the president came out and did something different. Tariffs were announced and delayed. The administration admonished Justin Trudeau while lauding Kim Jong Un. America slapped duties on European goods while trying to help a Chinese telecomm company as part of some backchannel deal.

Now, before the president visited Duluth yesterday, we finally got the big announcement on a larger swath of Chinese tariffs. You know, the policy that was promised during the campaign that caused so many Iron Rangers to vote for him in 2016. It made for a well executed message, and some folks I know had a swell time at the rally.

Here’s the problem. Iron ore is an important chess piece here, but just a chess piece in a game. Those tariffs came now for political reasons. It’s important now because the Rust Belt is one of the few places where this unpopular administration actually has a chance to win new votes.

Everything else seems driven by the desire to create chaos in order to maximize leverage. Why?

The short answer is it’s easy. Our alliances with Canada and members of the European Union prevent anything really bad from happening. We just stomp on some close relationships to send a message to everyone else. Meantime, our nation conducts affronts to humanity on the southern border, to the delight of the darkest elements in our society, and then “kindly” grows tired of the worst of it.

In other words, these are the tactics of a bully.

But then comes the realization. The words, “you’re a bully,” mean nothing to a bully. They laugh.

I read that one of the miners thanked the president because we “don’t have to worry” about layoffs anymore, thanks to the tariffs. The president of the Iron Mining Association told reporters that tariffs have “changed our economy,” even though most of them haven’t even been implemented yet.

But as I labored to explain years ago, it was the global recession that caused communist China to dump their steel unfairly. Economic stability keeps mines open everywhere.

Well, folks. China’s doing OK right now. Their economy grew more than 6 percent last year, twice our rate of improvement. Chinese steel accounts for only 2.15 percent of the steel we import now. The reason the mining industry likes tariffs that haven’t even been implemented yet is that it gives them cover to raise their prices and make bigger profits.

No, it ain’t China that will shut us down next time. It will probably be a global recession tied to trade wars and ever-escalating valuation of real estate, stock and currency. In other words, the stated outcome of our current policy.

The thing about recessions is that they only hurt people who aren’t rich. The wealthy not only survive them, but enjoy bargain prices on stocks and property. It’s the chumps who weren’t smart enough to already be rich who have to grow a bigger vegetable garden that year.

If you think this president will lift a finger to help the Iron Range when the next recession shuts down our mines again, I’ve got some high ground in Zim to sell you. The best he can get us is into a war.

This is a post about trade, but not really. Just like people voted for the president because of “economic anxiety.” The tariffs won’t do much but raise prices, and when they get snuffed out in the dead of night (the way tariffs always die) no one will say boo.

This is about our discordant ideas about a rapidly changing culture. Because for the president and others, “trade” is a proxy fight over multiculturalism.

Culture means way of life.

I don’t know how many times I’ve said those words in class lectures. Hundreds, at least. It’s a definition, but the words “way of life” also represent a truism rooted in languages all over the world. In English we need three words. Many other languages only need one. (Fun fact: Those are the ones that usually tie their whole existence to serenity and balance).

So when you hear anyone from your neighbor to the President of the United States use the words “way of life,” you have an immediate cue that this is about culture, not policy. Pathos, not logos. It’s right there in the words.

How many times did we hear the words “way of life” in the president’s speech, or those of his supporters? How many times do we hear those words here on the Iron Range, or see them in our newspapers?

Some say that means hunting, fishing, mining. Well, those are aspects of our culture. But is that all? Immigrants came the Iron Range for a better life for their families, not because they just happened to be big supporters of the mining industry.

To me, the biggest threat to mining on the Iron Range isn’t some kid wearing sandals and a hemp shirt carrying a clipboard, but the halting progress in producing value-added iron products and economic diversification. That’s how I know this isn’t really about trade.

We might have a trade war. We might even have an actual war before this ordeal is over. But that’s only because we’re in a culture war right now. And that’s only possible because some people view democracy and decency as a privilege for half our country that should be denied the other half.

I watched the trump panel yesterday and the comments scrolling by on the right, filled with ignorance, hate, malice, and evil….truly ugly times. I wonder how many of those people will eventually look back with shame on their actions and statements, and, if so, how long it will take.

You did not even mention, the possibility, that our neighbors to the north, might just stay home and shop, instead of coming to Duluth. I live in Grand Marais, and, i see Canadians all of the time in our stores, especially the municipal liquor store. If i were a Canadian living in Thunder Bay, i would just skip that drive south for awhile.

Trump doesn’t really seem to know or understand Minnesota. He doesn’t hunt or fish, and i doubt he has portaged or been on a pontoon to watch the sunset with your family —– And i am sure he has never swatted mosquitoes.

There are a couple of important issues in the potential impact of of the new tariff policies.

First, the rise in the price of steel due to tariffs makes American steel products more expensive. That comes partly out of the pocket of all of us as we buy and use products made of steel which have become more expensive, but it also raises prices of American steel products on the world market. That places US products at a disadvantage compared with products from other countries, leading to lower sales, leading to lower demand for American steel. Somewhere in all of that there is a trade-off, a point where the increased profits on steel due to tariffs start to collapse due to decreased demand for steel from steel end users whose sales have declined. In the long run — years — this means that the tariffs may well lead to decreased, not increased, mining activity, and decreased jobs in mining. This impact could be significantly amplified by the impact of retaliatory tariffs also causing reduced sales, as US end users of steel find themselves excluded from world markets.

Second, if the US enters into a series of trade conflicts with Europe, Canada, Mexico, Brazil, Japan, China, and other countries, working to reduce our imports from them and experiencing reduced exports as they retaliate, the natural tendency is for those coutries to seek other markets. The trade conflict with the US would produce a natural potential market for trade among the countries we are fighting with. Canada would be motivated to seek added trade with Europe, China, Japan, and so on in order to compensate for their lost trade with the US, and many of those countries would have an increased demand for imports in the face of decreased trade with the US. In the end, the US could well end up on the outside looking in at a world trade system that excludes us. In fact, that is exactly what the new US trade policy would encourage.

The existing trade system has evolved over more than a half century. We can undo it, if we want, in a few years. If we then find we don’t like the outcome, it might take decades to re-establish the trade we chose to throw away, while the rest of the developed world proceeds blithely along without us, replacing their former trade with the US with trade with each other in the wake of the US discarding the trade relationships we have formed.

Great post as always Aaron. Some Trump fans are in the same kind of “dysphoria” (dystopian euphoria?) that some Obama voters had after Obama’s election where they said things like “I don’t have to worry about my mortgage anymore…” etc. etc. I also think there is, sadly, a great inability of both sides of the aisle to be gracious winners in American politics. Obama’s supporters were pretty ruthless, and generally here in America we up the ante until someone gets hurt. Today we are very close to that “someone getting hurt” moment. We all need to get our heads out of our collective rear ends and realize that politicians are still politicians (L or R, Dem or Rep). They do sometimes try to make good change, but that’s a secondary benefit to them, and we all know the primary reason they do it. I only applaud the tariffs IF and only if they lead to bilateral negotiation that creates a mutually beneficial arrangement. I don’t like the tone being put out there, and frankly it undermines finding any real solutions to what’s causing the culture war in the first place (economic dislocation).

I agree that economic dislocation is and will be an extremely important, if not the most important, issue of the next decades.

Globalization certainly has a role in the problem. Two billion people in China and India cannot become active participants in the world economy without causing a large impact.

In the US and the developed world, however, the main cause of economic dislocation is technology and mechanization. The mining industry continues to produce output that matches the heydays of the past, but uses a fraction of the number of workers. Newer mines will probably be even more highly mechanized, up to and including drone machines, and use even fewer workers. Factory workers have seen the number of jobs decrease strikingly while production rises. The CEO of United Technologies boasted that the government financial aid given to help keep Carrier plants stay open in the US would be used to mechanize the factories to the extent that the plants would employ so few workers that costs attained would be lower than switching the plants to Mexico.

Demagogues from the right and left blaming foreigners and immigrants or bankers and managers do not add any value in this discussion, nor do people from both sides demanding a return to the world of the 1950’s and early 60’s, when the world seemed so much better unless you were a woman or a person of color, accomplish anything. The world is not going to run in reverse.

Education, especially in math, science, and technical fields, vocational training in fields that are still viable, and programs that aim to allow for diversification and modernization of local economies are obviously helpful, but probably do not provide a definitive solution given that many people do not seem to have the ability or background to benefit and that the possibilities of diversification and modernization do not probably offer solutions for a large number of people either. Other countries, most notably Germany, have faced this problem with a lot more success than we have, but have not succeeded in dealing with it definitively, with many people left behind to be caught by their much more generous safety net programs, at considerable cost in taxes.

This is a discussion we need to have without the pyrotechnics, since it is complex, challenging, highly technical, and highly speculative. It requires our attention, unless we want to live in a future that excludes large numbers of our citizens of all races and backgrounds, creating a large underclass, probably dangerous both to day to day law and order and to the continuation of our democracy.

Gerald raises some excellent issues but ignores the issue that fear of loss of traditional culture is, in fact, an issue which has as much validity as economic dislocation. As Fichte noted in the early 19th century, most people wish to build a life in an environment that reflects their own culture and values. This is one reason why emigration is NOT the choice of most people seeking a better existence, regardless of the relative poverty of their homeland. Today, millions of Americans fear the possibility that they will become aliens in their own community; NOT because people have immigrant parents–like Ted Cruz and Mario Rubio–but because for the first time the US intelligentsia is preaching that a “multicultural” America is the norm and that the expectation of assimilation is cultural tyranny. When the Irish arrived in the 19th century, bigots certainly resented it but the governments of the United States did not argue that community schools should now teach bilingually in Gaelic and English. When Eastern Europeans entered the US by the millions during the 1900s, the country did not fund the printing of official documents in Cyrillic and Hebrew characters. When Japanese immigrant youth in San Francisco were dispatched to a special public school with instruction in Japanese in 1922, residents of Tokyo and Kyoto rioted to demand that Japanese students in the US be integrated into the English-speaking public school system.
I personally don’t have a problem with cultural change. My hometown of Miami, Florida, was vastly improved by the arrival of the refugees from Castro’s Cuba (who included my wonderful next-door neighbors during my childhood). But I also know that I now am an alien in that community. More often than not, I must speak Spanish to ask for directions, discuss a workman’s assignment, or engage in a casual social conversation. I can’t find a decent barbecue restaurant, attend a horse race, or do many of the other things that were typical for south Florida when I visit my former home. So, I avoid the place, even though I actually like the area’s culture.
Millions of Americans aren’t equally adaptable. They want their cultural communities to endure. You can argue that this is not possible in a globalized world or that it is a form of tribalism, but this desire is a valid one if only because it is so widely shared. Minnesotans who have had multiculturalism forced upon them as a societal value without being given even an opportunity to debate its merits can be forgiven if some of them react by following the demagogues and charlatans who promise them cultural immortality.

The ideas you express are indeed common, and there is a cultural conflict between some white people and other white people, Hispanic people, black people, and Asian people.

This is not new, however. There were once whole political movements based on the effort to exclude new groups of people. There was strong concern about the “pollution” of the majority culture by “alien” influences. The sounds of the languages and smells of the cooking of Germans, Irish, Italians, Jews, Slavs, and others were all considered offensive and threatening, and people were angered when those groups could not speak English well.

In fact, in the past schools were frequently taught in languages other than English. In Minnesota there were once numerous public schools in rural areas that gave instruction in German, not English. When I was young, encountering older adults born in the US who could read German but not English and spoke English with a German accent was not uncommon in the area extending between New Ulm and Mankato and St. Cloud and Western Stearns county. The German schools in rural areas disappeared abruptly during WW II, and by now there are few surviving veterans of that era.

Other cultural traditions, for example the Catholic and Jewish religions, have become part of the US heritage but were initially seen as threatening and bitterly opposed. The KKK was as angry about Catholics and Jews as it was about blacks.

Some of the fears you express are common worries but are not supported by actual facts. For example, as was typical of other immigrants in the past, Latino and Asian immigrant families show a pattern of assimilation over three generations. In language, among Spanish speaking immigrants, data collection shows that typically the first generation has difficulty with English and is much more comfortable with Spanish, the second generation is more comfortable in English but can speak Spanish fairly well, and the third generation is almost completely monolingual in English. I know many Asian Americans in the same situation, who can no longer speak the language their grandparents were fluent in. The same is true of Italian Americans and Jewish Americans: the era when you could go to neighborhoods in large cities and find most people speaking Italian or Yiddish is gone.

I certainly can understand fear and discomfort with dealing with cultures other than your own, and can also understand the feeling of being threatened that occurs in many states as people of Latino, Asian, and African American backgrounds come to outnumber native born whites. I have no doubt that you are expressing a very common feeling among supporters of Trump, many of whom indicate in polling that issues of cultural and racial supremacy are central to their backing of him.

I agree we are going to have to make some political decisions here. We can continue along the American tradition of welcoming immigrants, or we can pass new laws to create racial and ethnic exclusions.

I found it particularly interesting that you complained you could not find any decent barbecue in South Florida any more. Barbecue is, of course, the legacy of Spanish and African people, entering into and supplementing the cooking traditions of Northern European people who are the white founders of our standard culture, and was at one time considered crude and uncivilized by our white ancestors. The word itself is from Spanish. I suspect that if white people can learn to eat barbecue and love it, the day will also come when we will find other cultural traditions that come from outside our mainstream equally acceptable and unthreatening.

Thanks for the comments folks. Derek and Gerald pointed out some issues that I was planning to write about but that got away from me in the development of this post. Gerald points out the economic impact of tariffs in some detail, and all of that is highly relevant. Derek, your point about economic dislocation is good. It’s related to the truck driver column I wrote last Sunday and the entire discussion about automation and the changing workforce. People don’t just talk about political issues when they tell me they support the president, they talk about everything. The way the world is. The confusion and fears. Their kids and grandkids and drugs and smartphones. Certainty becomes attractive in this environment. The president’s policy positions aren’t certain. They’re entirely malleable, except for the distrust of immigration and opposition to anything his predecessor did. But he cultivates the notion that HE is certain, and that if you follow him he’ll get us out of whatever problem. It’s not true, based on his record in business (he’s typically only successful in getting himself out of trouble), but I get why people hope that it is.

Thank you, Thank you, Thank you!!!! I am appalled at the way most people who support Trump have no idea what they are supporting and why! The Ignorance is shameful! They are forgetting our history and are headed down a very very bad road! The relations that our president is destroying with other countries is the worst and most mean spirited I have ever seen! Thank you again. Can I share this?

On the other side of the coin a lot of people who hate trump have no idea what they are supporting and why. I didn’t vote for him, but I can still cheer him on when he does good and voice my opinion in a controlled manner when he does bad.

John, thank you. I was capable of doing as you say when Obama was President even though I vehemently disagreed with the framework and implementation of the ACA, and other policies. When he did some things that anybody should applaud, I was able to give him credit when talking with peers. I also never hated the man. I wonder where this hate comes from that causes people to call Trump Hitler, or where the hate came from that caused people to call Obama and Hillary the AntiChrist, it’s very alarming. A politician that lies with a smooth voice or a peaceful demeanor is still just as much a liar as a politician whose style is liken more to a jackhammer.

For two years almost every news outlet has stated everything Trump talks about or does (and I mean every little thing) will literally bring about the end of the world. This erodes the valid points coming from the political left in this country to the point of being ignored by a lot of people. Remember the boy who cried wolf… I have seen the political right in this country make the same mistake. As people continue to stew in their extreme hate of Trump they will become more detached from reality and fall into the trap just like those that hated Bill Clinton on the other side a couple decades ago. Growing economies are far more important to election results than continuous drama and B.S. thrown from across the isle.

I would say that while I think this is partially true about the media, the constant malleability of the President’s positions has made it difficult for any of the predictions (even from experts) to come true or false.

Thanks Dr Brown. It is difficult to get through the capitalist authoritarian nationalism of the man as he continually distorts the reality of the big picture. Our economy did not begin with his coming to office and will not end on his exit. But the polices of trickle down lead to near bankruptcy more then once in our history. They will again if the brakes are not put on. I have not supported our free trade agreements since NFATA. That being said worldwide displacement of population is central to the economic benefit of the few and I mean the very very few. Statistics bare that out. What we see in this country is a squeezing on the population for the benefit of a small number of people. And the rest of us tossed hither and yon for their economic benefit. And the very process of worldwide migration that is making the wealthy even more rich is used to cast blame on the victims of displacement. Trade agreements never seem to hinge on equal distribution of wealth throughout the world. Some lip service was given. Not anymore. People go to where work is. They would not if the income where they lived was of equal purchasing capacity to where they might travel. So remember the iPhone chip plants in China. People travelled great distances in China to work in those factory farms. They soon rebelled. People were drawn there for “a better life!” Just as people who came to this nation since the mid 1800 were. However remember the advertisements of the times were manipulating people as they still do. The national tragedy of blaming the victim has got to end now. It is shameful. His cult followers have brainwashed themselves as well been brainwashed.

Well written Aaron! Couldn’t help the need to comment on this very important political issue. In my eyes, and based more on anecdotal evidence, sadly I believe a red wave is about to sweep through MN and especially our 8th district. I’ve never hoped to be more wrong in my life! I know a handful of people that attended the Trump rally and some waited hours and still couldn’t get in. Loose estimates of 15-20k of his supporters I heard showed up. Horrifyingly, that is an incredible amount of support that should not be underestimated. I believe we are fighting the war against the right and Trumpism the wrong way. I think it’s incredibly counter productive to call his supporters a brainwashed cult, racist, bigoted, uninformed (even though in many cases true), poor, lazy, uneducated, etc. In my experience when something is said that insults somebody they usually dig their feet in and fight harder even if they are wrong. And I believe we are seeing growing evidence of this on the Range. My “evidence” is simply listening to others especially lifelong to lifelong DFLers who strongly support Trump. I don’t have a ton of confidence in polls but do think their trends are important to watch. Long story short, I think we would be much better off focusing on a few powerful positive issues than attacking Trump on everything he does. Trump is an expert at portraying the attacks against him as an attack on his supporters and they are many good, decent, intelligent (even though misled) people that possibly could be swayed back if we learn to counter the Right productively. I don’t believe the bright light politics of Hollywood or late night shows work here and are doing an incredible disservice. Our messaging is very poor and all over the map right now compared to his. I would be very interested to what you think Aaron.

For anyone wanting a brief description of what China is doing and why this needs to be an internationally applied tariff. Unfortunately other countries want to make a cut by basically smuggling subsidized Chinese steel into the United States. Much more detailed information is available if you care to get deep into the weeds. Don’t be fooled into regurgitating gotcha “news” stories. I’m sorry but fake news seems to be the standard now and I don’t say that lightly. Take a look at the latest cover of Time magazine. Then research who the little girl is on the cover and the details of her story and it will kind of sum up where a lot of journalism is right now. Sad.

The problem still remains that regardless of Ross’ reasoning, Canada imports more steel from the US than it exports to the US, as well as directly importing taconite pellets. Canadian retaliation against the steel tariffs will hurt Minnesota miners, and retaliation for the tariffs with other industries will hurt other American workers.

Ross seems to be arguing that other nations should join the US in increasing tariffs against the Chinese. The barrage of tariffs introduced against Japan, the EU, Canada, Brazil, and others makes it much less likely they will cooperate with the US in that effort, and much more likely they will seek added trade with China as well as each other to compensate for loss of trade with the US. As Aaron notes, approval of the US has fallen to record lows in Canada. Approval is also at record lows in many other countries. This is not the way to form alliances for trade efforts.

I disdain Donald Trump almost universally policy wise and as an individual but Donald Trump is right on trade. All we are asking for is fair treatment and a level playing field. If other countries and our allies included will not grant us that then the consequences and repercussions are their fault not ours. Trump and Bernie Sanders were selling the same thing on trade policy and it is why I donated to Bernie’s campaign. We have tried to be nice with China and they won’t play ball so here we are……with an idiot at the helm who just may be doing some Yeoman’s work as it relates to trade.

I stumbled across an interesting fact on trade today, which I think puts an interesting perspective on the whole question.

The US ranks near the absolute bottom of developed nations in the ratio of imports of goods and services compared with total GDP. Among developed and developing nations, only Brazil is below us., with our figure about 15% and theirs 11.6%. The international average is 28%. China (18%) and India (22%) both rank above us. All Western European nations are well above us, and Japan is at 20%. Russia is at 21%. Canada imports 33% of its GDP, overwhelmingly from the US. France is 32%, the United Kingdom is 32%, and Germany is a whopping 40%. Aside from us and Brazil, most countries with low numbers are undeveloped nations without the resources to import goods and services.

Although this is of little consolation to a Carrier factory worker in Indiana whose job is being replaced by automation or moving to Mexico, it gives an insight into why all of our trading partners are pushing back so hard against the US contention that we are at a trade disadvantage compared with other countries.

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